If you’re making a New Year’s resolution this year, chances are it involves either fitness or finances. The top two New Year’s resolutions for 2015 were to “Stay fit and healthy” and “Lose weight.” And the 4th most common resolution was to “spend less, save more.”1
I’ve leave the fitness and health related resolutions to other bloggers. But I can give you some advice for the financial resolutions. Here are my top 3 tips to spend less and save more in 2016:
- Track how much you spend. It’s important you know how much you’re spending so you can identify any “leaks” in your budget. For example, you might be shocked to learn you’re spending hundreds of dollars a month on conveniences. I have a friend that loves 7-11 coffees and Vitamin Waters. But when she started doing a budget, she realized that 15% of her income was going towards these optional luxuries! She’s since cut back quite a bit. So, for the first few weeks of 2016, try marking down each expenditure. You can go “old school” and use pen and paper. Or you can use a spreadsheet or phone app. Google sheets is a free spreadsheet program that’s easy to use. And it offers all types of free budgeting templates. But if you have a smartphone, using a phone app might be easiest. After all, most people have their phones with them at all times, but may not necessarily have access to their computers at all times. Check out this list of the best free and paid budgeting apps of 2015.
- Make more money. I know, easier said than done, right? But making more money is definitely not impossible. And if your budget is already tight, making more money might be the only way for you to save more. I’ve written several posts about this already. Here’s a post about using Reddit to make more money from home. And here’s another one about non-traditional ways to earn income. I firmly believe everyone is good at something – usually several things – and you should use your skills to make extra money when you need it. Upwork (formerly Odesk) is a great place to pick up freelance jobs. If you’re a good writer, there are tons of places you can get paid to write articles or reviews. I’ve tried Zerys and Textbroker, but there are many others that might suit your needs. Or, if you know a lot about a particular topic, you can try to write your own blog. It can take a long time to make your blog successful. But if you do, it can be much more financially rewarding than writing for other companies.
- Become more financially literate. Most people I know understand very little about their finances. Some of them are even afraid to do their own taxes. As a result, they don’t know have any idea how the tax system works. So, the choices they make throughout the year are less-than-optimal from a tax perspective. And, if they vote, they don’t understand how a particular candidate’s proposed tax policies will affect them. For a basic understanding of finances, I recommend reading any of Suze Orman’s or Clark Howard’s books. A lot of people like Dave Ramsey, but I think he gives out some misinformation. Still, reading one of his books is better than understanding nothing about financial matters. But what if you already have a good understanding of the financial basics? Then I recommend The Bogleheads’ Guide to Investing. It offers a few simple and effective investing strategies. And it also has a lot of advice about saving money.
I know learning to manage your finances can be difficult. But you have to start somewhere. Even making a commitment to do one of the three items I recommend above would be a huge step towards gaining financial freedom.
Have any other suggestions for improving your financial situation in 2016? Be sure and share them in the comments below.